US Visa Opportunities for Foreign Nationals: Restaurants

Eric: Fernando has one of the most popular blog items that we’ve had in terms of hits and traffic volume. So, we wanted to come back and follow-up and focus on one particular issue of the E2 Visa in regards to buying a restaurant. Why don’t we start off first by just giving a brief recap. We went in pretty deep last time with the E2 Visa, so why don’t you give a real brief summary of what the E2 Visa is and then we’ll go from there in terms of a restaurant.

Fernando: Sure. The E2 Visa is also called the Treaty Investor Visa and it is a categorical Visa that is available to nationals of certain countries. Not every country. Certain countries with which the United States has a qualifying treaty, and for those countries, nationals of those countries who make an investment in the United States that is able to generate enough money for that investor and their family to live in the United States as a result of that investment-that foreign national can come to the United States and live here really indefinitely.

Eric: Is there a minimum amount essentially that they’re having to put in to be able to get that E2 Visa?

Fernando: That’s one of the big myths about the E2 category. The information that’s on the Internet actually doesn’t help, because there are a lot of attorneys when you look at their websites, that tell you it requires a $250,000 investment or it requires a $100,000 investment. The fact is, there is no minimum amount. I’ve done them for as little as $7,000. Now, there are other things that are going to be involved to make a $7,000 investment work, but the key point here is that there is no minimum amount that a foreign national needs to invest. I also want to interject that this should not be confused with the EB5 Category which requires a million dollar investment. That one does have a specific investment threshold. We’ve talked about that one before, that’s a whole different animal.

Eric: I think that’s where people get confused – they get the $500,000/the million, what does this mean?

Fernando: E2 – no minimum.

Eric: E2 no minimum… since we had the original interview there have been a lot of follow-up questions, and I think most of them for me personally, have been in regards to convenient stores, gas stations and restaurants. Why don’t we focus a little bit on the restaurants and go through a step by step – let’s say you’re an Italian national, and you want to open an Italian restaurant here in Tampa, Florida. How would you go about doing that?

Fernando: Well, the first thing you would consider is, am I going to start one from scratch, in other words am I going to go and lease space and purchase the equipment, or am I going to buy an existing restaurant which is maybe already Italian and change the name? The reason that’s important in the E2 context is because one of the things that you have to do is; even though there is no minimum investment amount, the immigration office here in the United States or the US Consulate, needs to be convinced that whatever amount you’ve invested, please visit:- whether it’s $7,000 or $700,000, is the amount that is required to make that business viable. And the reason that’s important is, if you buy an existing restaurant, which you are buying at fair market value prices, the government is not going to question whether you invested the correct amount, because obviously whoever you bought it from is selling it for the maximum amount they could get. On the other hand, if you are starting from nothing, then you could have a situation where the government comes back to you and says, “Ok. Prove to us that the $50,000 you put into this space is enough to really make this a viable business.”

Eric: So it almost sounds like it’s a better option to consider buying an existing business, is that a fact?

Fernando: Generally that’s what I recommend to clients. Obviously if you’re investing three, four or $500,000 to develop something from the ground up, they’re not going to question that, but most people aren’t doing that. For most people, their investment might be substantially less than that, and I always tell clients, we can do it either way, but it’s going to be a lot tighter from the standpoint of getting an approval than if you’re buying something on the open market.

Eric: What about franchises?

Fernando: Franchises are great. The reason franchises are great is because one of the things that is very key, and we’ll talk about this probably later, but one of the things that is key to the whole E2 category is the ability to show that whatever your investment is, it is going to have the ability within 5 years to generate more than a minimal living income. The nice thing about franchises is that they have all the documentation. They’ve done all the feasibility studies. They really do most of the work in connection with that 5 year forecast that you’re going to prepare when you submit your application showing that Yes! Obviously if this franchise information showed that this thing was never going to make money, you’d never buy it. So franchises are great… love them.

Eric: Let’s talk a little bit about buying an existing business and owner financing? How does that fit in? Frequently the issue is how you are going to do that – it might be $500,000 to buy this business and how you do that?

Fernando: Well, there are a couple of ways, and one of the things that’s unique to the E2 category, because the E2 category is premised on an investment. As a result, the regulation limit is the amount that can be financed. The limitations are a little stricter than what you would normally find in the open market. So a 20% down, 80% financing; from an E2 standpoint probably wouldn’t work, but you have to understand what the limitations actually apply to. The limitations on financing only apply to loans that are secured by the investment itself. Ok, so let’s look at the restaurant example. Let’s say that it’s a $300,000 restaurant. I only want to put $100,000 down and finance the other $200,000. There are a couple ways you can do that. If the owner finances that $200,000 and it is an unsecured loan, that’s going to be classified as cash, that’s going to be ok. This is something that comes up with a lot of my clients, they’ve been coming here to the United Sates…

Eric: But realistically, you’re not going to find owners that do that – finance without collateral.

Fernando: No, but I’m going to get to that. There are other options. A lot of my clients have been coming to the United States as visitors for years. Let’s say they own a condominium or home, and it’s worth three or four hundred thousand dollars and they’ve paid cash for it, or maybe there’s $200,000 equity on it. You can finance the investment and secure the $200,000 loan with your home. And that’s ok, because you’re not securing it with the investment. That’s also treated as cash. If you borrow the money back home, so that it’s secured by your assets back in the UK or wherever your from, in this case Italy, again, that’s going to be treated as cash here. So there are methods that you can try and use to be able to structure that financing.

Another thing that we’ve done sometimes, and the business would have to be feasible for this, is we split the transaction, and if the person, for example, is buying a business that includes real estate, we separate the real estate purchase from the purchase of the restaurant management business as a going concern, and by doing that, because most of the money is in the equipment and the real estate and all that, we’ve put the bulk of the financing there and then we can pay the $100,000 as an all cash purchase to buy the restaurant management business. Then the restaurant management business, not holding company, the “restaurant management business” basically rents the space from your other company, and that works. So there are a lot of things that we can do. We can get creative with that.

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